Does Green Public Procurement Trigger Environmental Innovations?

Abstract

Green public procurement has gained high political priority and is argued to be an effective demand-side policy to trigger environmental innovations. Its implementation usually takes the form of environmental award selection criteria in public procurement tenders. However, there is no direct or broad empirical evidence on its innovation impact. There are even doubts about its effectiveness as an innovation policy tool, as it does not require innovations as part of its contracts and might only influence the selection of awardees in public procurement tenders. We construct a novel firmlevel dataset to investigate the effect of winning green public procurement awards on firms' introduction of environmental innovations. Employing cross-sectional difference-in-differences methods, we find that winning green public procurement awards increases a firm's probability of introducing more environmentally friendly products on average by 20 percentage points. We show that this effect is driven by small and medium-sized firms and is not significant for larger firms. There is no significant effect on the introduction of more environmentally friendly processes.

Improving environmental outcomes along food supply chains

“…Finally, one important channel through which green public procurement could affect environmental impacts is by stimulating innovation of more environmentally friendly products. Orsatti et al (2020) and Krieger and Zipperer (2022) both find evidence of such a link (although their findings are not specific to agri-food sectors).…”

Public Procurement as an Innovation Policy: Where Do We Stand?

“…In more recent work, Krieger and Zipperer (2022) provide the first empirical microevidence of the effect of GPP on firm performance in producing environmental innovations. Unlike Ghisetti (2017), they do not assume but rather explicitly test the hypothesis that GPP creates a demand pull for eco-innovations.…”